Accounts payable operations, for example, within a corporate environment, are often settled through direct payments to vendors or merchants. In other words, once an invoice has been approved for payment, an accounting department will make payment to the merchant often by check. This paper transaction is inefficient and costly in terms of time and manpower required to manage the process.
Efforts to streamline payment transactions for individuals and businesses, however, have not worked well within the traditional corporate accounts payable environment. VISA Commerce is one example initiative from VISA that allows companies to enter into bilateral agreements to make electronic payments between them using the credit card infrastructure. With VISA Commerce, both the buyer and seller must agree beforehand as to how these transactions will occur. Another effort to streamline payment operations from an individual perspective is on-line banking. With on-line banking, individuals can provide vendor information to their banks, and the banks can then provide payment to the vendors directly from the respective bank accounts. In addition, some banks offer electronic payment and invoicing with respect to certain vendors. Still further, on-line payment mechanisms now include payment options such as those provided by PayPal. With PayPal, individuals can sign up and designate personal bank accounts and credit cards to be used with their PayPal accounts. These individuals may then make payments and receive payments through PayPal to other PayPal account holders.
With respect to ease of payment, credit cards or payment cards are relatively efficient, although they are not particularly helpful within the accounts payable environment because they have traditional required the direct involvement of the vendor or merchant. Credit card transactions are typically initiated by a merchant “swiping” a card from a card holder. This “swiping” event includes the merchant obtaining a credit card number and verification information, and this transfer of information can occur in a number of different ways, including in person, over a telephone and through electronic communications. The merchant uses the credit card number and verification information to place the credit card transaction into the credit card transaction system. Merchants often settle their credit card transactions using an acquirer that buys the merchants receipts for a percentage of their value. The acquirer then proceeds to collect payment from the credit card holder through the issuing bank. Typical credit card transactions and ultimate payment of the credit transaction, therefore, are based upon merchant initiated credit transactions.